The S&P 500 posted its fourth consecutive week of losses on Friday as the war between the US and Iran continues, pushing some stocks deeper into oversold territory. A stock is considered oversold when the 14-day Relative Strength Index falls below 30. Traders often view oversold numbers as buying opportunities, suggesting that the stock may have fallen too much in a short period of time. To be sure, there are some stocks that may have overextended their upside even as the overall market is down. Overbought stocks are those with an RSI value above 70. CNBC Pro used LSEG data to look for S&P 500 stocks that were oversold based on RSI and were down at least 5% over the week. We also identified overbought stocks that rose at least 5% this week. Oversold Stocks Several consumer staples stocks were among the most oversold stocks this week as continuing conflict in the Middle East caused consumers to tighten their wallet strings. McCormick is among them. McCormick has an RSI of 21.3, making it the third most oversold stock in the S&P 500. The stock is down more than 7% this week and more than 20% this month. However, shares outperformed on a relative basis on Friday after Unilever announced it would negotiate to separate its food business and merge with McCormick. Analyst Andrew Lazar, who shares McCormick’s rating, said: “While we recognize the significant strategic benefits and potentially compelling EPS accretives of this potential transaction, we also acknowledge that the expected high transaction value, execution risk and resulting majority ownership of the combined company by Unilever shareholders may dampen initial investor enthusiasm.” Other consumer staples stocks that are oversold include General Mills and Conagra Brands. But the most oversold name was Pure Parts, an automotive and industrial products and solutions company. The stock had the lowest RSI of 13.6. Overbought stocks As the war between the US and Iran continues, energy companies dominate the overbought list, pushing up oil prices. APA had the highest RSI at 81.7. APA is up about 14% for the week. Other overbought stocks include Occidental Petroleum, Ciena, and Devon Energy. As the war continues, these energy stocks could rise further along with oil. However, overbought signals could alert investors to start pairing positions in these stocks.
